Vithal Kamat, chairman and managing director of Kamat Hotels India Ltd., was a second-generation entrepreneur who has taken the Kamat Hotels brand to new heights. Kamat Hotels included five major verticals, from five-star luxury hotels (The Orchid Ecotels) to economy restaurants (Kamat Restaurants) catering to different customer segments. Kamat had ambitious plans for the expansion of every vertical using alternative growth strategies. However, the recent economic slump had caused a sudden setback due to the fall in average room occupancy and competing room-tariff rates offered by other hotels. In such a tumultuous situation, Kamat planned to use the core competency of The Orchid as an “ecotel,” that is, an environmentally friendly hotel, to go in for corporate branding and leverage its position in the market.

The case illustrates the challenges faced by Kamat in extending the core competency of The Orchid to its other verticals. The Orchid had performed better than the industry average until 2008, but in 2009 its performance dipped, partly because of the economic recession. This prompted the company board members to decide on extending the core competency of the ecologically sustainable hotel into other verticals. However, this decision had to be considered carefully in light of its impact on The Orchid as well as on the other verticals. What were the challenges that would be faced while extending the core competency of “ecoteling” to the other verticals?

Learning Objective:

The case illustrates the trade-off between extending a financially profitable core competency to other verticals that might remove the competitive advantage of one, and sustaining the core competency in one vertical for a longer period of time. The case prompts students to contemplate the decision points with respect to environmental values vis-à-vis other business models. It involves students in an attempt to figure out growth alternatives by leveraging or separating Kamat’s business model and eco-friendly values. The case is structured to help the student:

Understand the process of building a core competency.

Analyze the impact of extending a brand that is built on environmentally sustainable competencies. Students may be encouraged to discuss the trade-offs between growth and sustainable competitive advantage.

Analyze the pros and cons of alternative strategies while extending core competencies.

Create win-win strategies that will encompass environmental sustainability and branding.

Analyze the social implications of ecoteling in terms of consumption patterns and the environment.